They focus on how companies are increasingly using computers instead of people.

I'm not sure how this would be addressed.

And we've only just started the mobile digital revolution.

How many tellers and shop assistants and accounting clerks will lose their jobs in the coming decades?

They also have a great line: "Offshoring is only the waystation to automation."

We are creating jobs, but not enough of them. The employment-to-population ratio, or percentage of working-age people that have work, dropped over 5 points during the Great Recession, and has improved only half a point in the three and a half years since it ended [pdf].

As the jaws of the snake opened, wages suffered even more than job growth. Adjusted for inflation, the average U.S. household now has lower income than it did in 1997. Wages as a share of G.D.P. are now at an all-time low, even as corporate profits are at an all-time high. The implicit bargain that gave workers a steady share of the productivity gains has unraveled.

What’s going on? Why have job volumes and wages become decoupled from the rest of the train of economic progress? There are several explanations, including tax and policy changes and the effects of globalization and off-shoring. We agree that these matter but want to stress another driver of the “Great Decoupling” — the changing nature of technological progress.

As digital devices like computers and robots get more capable thanks to Moore’s Law (the proposition that the number of transistors on a semiconductor can be inexpensively doubled about every two years), they can do more of the work that people used to do. Digital labor, in short, substitutes for human labor. This happens first with more routine tasks, which is a big part of the reason why less-educated workers have seen their wages fall the most as we moved deeper into the computer age.

Estimates of potential costs from these cases vary widely, but some in the banking industry fear they could reach $300 billion if the institutions lose all of the litigation. Depending on the final price tag, the costs could lower profits and slow the economic recovery by weakening the banks’ ability to lend just as the housing market is showing signs of life.

The banks are battling on three fronts: with prosecutors who accuse them of fraud, with regulators who claim that they duped investors into buying bad mortgage securities, and with investors seeking to force them to buy back the soured loans.

Timms appears to have tried to disguise her voice during the phone-in, by blocking her nose, and almost gave the game away at the start of her call when the receptionist asked for the phone number she was calling from for the show's records. Timms read out all the correct numbers on her cellphone except the final digit.

When The Times confronted Timms yesterday she said she had done it as a "bit of a practical joke, that was all". "I could tell Tim knew who it was because he called me by my name, so end of story."

When asked if she had two children and a partner who had been laid off at Tiwai, she reiterated it had been a practical joke and a "few laughs".

Based on new data concerning commodity trade flows, the report highlights how international politics have come to dominate resource markets. It says “every country for itself” resource grabs mean that markets do not respond properly to higher prices, threatening trade wars, environmental degradation and famine in poorer countries unless the world finds new ways to govern resources.

The real forces driving the seven- and eight-figure prices in the contemporary market are not art-historical importance, so much as what Gopnik characterizes as the souk-like atmosphere surrounding both fairs and auction houses — the places where most big-ticket contemporary art is now sold, and places where the act of spending money is more important than the art it’s being spent on. Maneker is absolutely right about this: “Of course it’s not about the art,” he writes. “An auction is an event about the buyers, not the art.” And exactly the same thing can be said about an event like Art Basel Miami Beach — an event where Kelly Crow’s curtain-raiser can include this photo caption:

New York artist Wade Guyton earned a reputation for using a large inkjet printer to create images of the letter ‘U.’

Those “U” panels now sell for upwards of $200,000 apiece, brand new, and one early X painting recently sold for $782,500.

By dint of its hard-headed negotiating, KBW’s board was able to get Stifel to raise its offer by $20.8 million. But of that, only $3.8 million will go to shareholders, while the rest—the $17 million boost in the retention pool—will go to KBW employees. Of course! I believe the company has been screwing its commission-paying customers for years, so it’s only natural that the firm’s management is going out with a bang by apparently screwing its shareholders, too.

I’m having trouble coming up with quite as stark an example of self-dealing by the management of a public company. Under what fiduciary laws of the universe, for example, should KBW’s board even care about the size of Stifel’s retention pool at all? Employee retention is Stifel’s problem, not KBW’s. The first, last and only concern KBW’s board should have had in negotiating was maximizing value for KBW shareholders. This the board manifestly did not do. Actually, it did the opposite. The board agreed to a deal that included an extra $57 million in cash that Stifel was willing to part with that was funneled away from shareholders, to employees. This is outrageous!

If you want to understand what’s happening to income distribution in the 21st century economy, you need to stop talking so much about skills, and start talking much more about profits and who owns the capital.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

41 Comments

#1 is on the money. B2B automation - where your Purchase Order becomes my Sales Order etc right down to Your Payment to me becomes my Cash Receipt - all untouched by human hands except if a physical pick/pack/ship is needed - is just on the cusp of affordability to every business.

That's a lot of clerical types out on the street for starters.

And because much remaining clerical stuff can be done from anywhere (images of paper docs, teleworking, etc), there's a race to the bottom as the stay-at-home worker still in the nation-state finds that s/he is undercut by a much poorer, better-educated and more intensely motivated personage Somewhere Else.

The old phrase 'on the InterWebs, no-one knows you're a dog' does occur....with the twist that if'n all yer need ter do is reproduce a few figures and enter some text from a doc, then sorry m8, the blending of good OCR and clever back-end plumbing is poised to take That task away too!

So the cost to us fewer and fewer PAYE is we have a bigger and ever growing "natural" or structural un-employment rate / underclass that we will have to fund via increased taxes going to ppl who will never work or work again.
I cant actually see a sane alternative.
regards

Dry Bridge? It's Sandy Bridge and her sister Ivy Bridge who are making large scale automation increasingly possible :)
Regarding what to do -- aren't we all supposed to be the best consumers we can be, sell houses to each other and generally keep the Service Economy running smoothly, with a nice comfortable velocity of money (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1085...)? [/tongue out of cheek]
Seriously, the movie Wall-E has a few pointed things to say about the possible results of the whole automation deal. Sure, it's wrapped up for kids, but there's some thoughtful meat inside.
All the best to everyone,
JetLiner

Because at precisely midnight Bernard will be awakened from a sweat drenched nightmare, you know, the recurring one about the smiley face stalking him through dimly lit alleyways singing don't worry be happy, ....anyways, he'll sit bolt upright and shout out " alright already, I can't do it anymore, I give up , I couldn't take much more fear and loathing anyway, I'll try to be better, I'll try not being such a miserable SOB all the time, just let me be.
And then he'll hear out of the gloom, "shut up Bernard , quit eating those gummy bears and we'll all get some sleep"
" Yes dear"

#1 - I'm pretty sure there is a direct correlation between financial complexity and Excel functionality. As the spreadsheet got bigger and more powerful so did the business cases! Leading us all to leveraged calamity.

#1 This makes sense. The increasing trend to automation will require less manhours worked. Our productivity is very poor without significant automation. Why, therefore do we need to fill our country with imigrants when we are not even effectively utilising the people that we have, and in the future automation will reduce the manpower demands for even a productive ecconomy like the USA.

re Digital labor, in short, substitutes for human labor. This happens first with more routine tasks, which is a big part of the reason why less-educated workers have seen their wages fall the most as we moved deeper into the computer age.

Digital Labor does not require accomodation

Digital labour will therefore not be able to participate as a tenant, landlord, or homeowner in New Zealand's real estate market

Digital labor will not be able to act as a conduit for the accomodation supplement between taxpayers and landlords

Digital labor will not add to congestion on the roads

Digital Labour will not require extra infrastructure to be built. Such as sewerage, water mains, and so on.

Bernard,
On the one hand today's #8 suggests you are concerned with income inequality.
and ..
As I read your Cross of Gold article suggested you might be in favour of higher inflation.
so my question then ..

How do we increase income growth at the same time as keeping inflation in check (on the basis increasing CPI and assets prices undermine real purchasing power for the poor)?

Income growth, on a finite planet you cannot grow for ever. We have only got here (grown) by exploiting fossil fuels the output of which is in decline....therefore income will decline.
The only real Q is, how long before (enough) ppl notice, the promises of recovery etc are never ever going to come true.
regards

#2 - the next wave - or - Occams Razor
How ironic. The US government poured $700 billion TARP into the TBTF banks, and now the victims of those banks are after $300 billion in litigation. Makes you wonder why the US government didn't get Steve Keen along right at the beginning and do a debt jubilee of 50% to the lemmings, and make the banks eat the the rest as a haircut. Would have saved a lot of time to get to the same place. A lot sooner.

I agree except the banks would have collapsed and so would our global electronic finiance industry.
Depositors would have also exited.....
The only option left was nationalisation...and the Americans wouldnt do that.
Hence the open doors policy might yet be ours.
regards

Re #4; Not long ago I saw an article hyping the great potential of Phosphate-Lithium ion batteries for future transportation needs. Great except those involved had ignored the fact that acquiring future supplies of phosphate are already a concern for agricultural users, hence such discussions as mining the Chatham Rise for minerals. So the competition for resources will continue to grow both between countries and between industries. Wasnt there an article here on Interest.co not so long ago about some farmers in India losing access to irrigation water because of the growing needs of a nearby city? It seems more and more likely that this all ends rather messily.

That would be a reasonable conclusion and indeed if you look at such things as the re-visit of limits to growth the graphs show this quite clearly. The crazy thing is if we had done something about this decades ago it probably wouldnt end "rather messily".
The problem is of course population, NZ is one of the few places on earth that doesnt have that problem....unless we get swamping...
regards

I actually dont eat much of it and I think I might prefer vegemite....but thank i will go looking, it might make she who must be obeyed happier as she consumes quite a bit.
Ive also seen something called "my mate" what the hell anything for a quiet life...LOL
regards

LOL....I just bought her xmas present last night new china ware for "girlie" afternoons. Im glad Im at work for those afternoons, if not I run far away.....even the "man cave" isnt safe.
NB Pretty sure the factory is backup soon?
regards

Sore-Loser. Safe-as-houses. You are so right. Bingo.
A case of the "slows". Why did it take so long. Have been waiting a long time for this to come up. There are 90,000 leaky homes in nz with 40,000 in Auckland (out of a total AKL stock of 400,000). That's just the leaky ones. Assume there are more monolithic-clad houses that are not leaky. One thing for certain. The market value of all of them has collapsed. Some are un-saleable, some will be for sale, but not at any price. There must be more than 100,000 monolithic homes that are effectively "off the market". The Marmite story demonstrates what happens to the price of remaining available stock when a huge chunk of inventory is withdrawn from the market. Prices go up.

Sure, the defective inventory is probably available, but no-one is buying it, and the prices of all like-style inventory is tainted by the leaky ones. (see the plaintive pleas of VON here on this site) The Government HAD in its hands the opportunity to restrain housing prices by simply getting on with repairing the inventory of leaky homes. Government has in effect maintained the shortage by prolonging the shortage. Remember, leaky homes are occupying land-supply-inventory which is effectively no longer "on the market".

#1 seems like a strawman argument. One could easily imagine higher productivity per worker resulting in fewer jobs overall, but it is much harder to imagine it causing wages for any particular job to decline. (although of course large amounts of unemployment will cause wages to decline...)

I dont agree, as really fewer jobs is really synonymous with lower wages...what you do tend to find is that wages are "sticky" ie few ppl ever take a % cut in the same job.....what usually happens is ppl get laid off and then have to take a job at a lower rate....so the drop when it happens can be quite big....
I used to work for EDS NZ....they said my teams wages were over the odds so they were outsourcing my/our job to Malaysia. If I wanted I could go live there, on a malay wage of course. that's some decline.....
I left and to another job with a 25% pay increase....
The thing is, rising un-employment really only severly impacts the un-skilled.....that covers manual workers and middle managers btw....early on anyway. Interestingly middle managers when they go tend to end up manual workers at McD's or something, ie the impact can be quite large and long term...
For myself I determined that technical skills in demand areas was my best way to be protected from un-employment...for the last 12 years it seems to be working quite well.
regards

Literacy begins at home. You read. It takes time. We're looking at a cohort who watch, not read; the level-raise required can't be taught, it has to be done by the individual - don't blame the teachers, or the school system.

Yep, much of my kids learning is visual. Watch youtube on how to do something, apply it. Its as much about knowing how to find the info and apply it as the basics....cant do without those, but there is a lot more to it. Myself I use youtube for DIY hugely....want to make or mod something? want a review? almost certianly its been done and taped multiple times on youtube.
Some years ago I watched my eldest at 12 add mods to minecraft. Watch how on youtube, go find the mods that look cool....crack open the minecraft.jar, add multiple patches in the right order....run it add mods packs......mostly visual and audio instruction. Nothing like that taught in school at that age but they do teach how to find knowledge...
regards

Look beyond the maths and literacy at how many ppl in here dont want to use their capability in maths etc to expand "knowledge" and make logical conclusions based on data and evidence.
The latter is far more important than the former.....
regards

Interesting case in point is the Chief Science Adviser. Admittedly, neither economics nor energy are his fields of expertise, but he talks of resource constraints, then fails to relate that to child poverty, via the blindingly obvious link of 'incomes'.

Then he advises our head honcho. Go figure (which is what I suggest he does).

Ive been watching what he's saying and doing, my first cut on him was he was as big a useless as the rest of his party. Somethings however suggest a more positive take on him might be justified....time will tell. If he is indeed switched on and isnt blinkered then maybe he's plotting his future strategy as Leader of the National party in the constrained future world we face....he's laying foundations.
Vested interests are at play though even in this piece.
"Political lobby group Straterra said the Government's vision to build growth and jobs in New Zealand through sustainably using New Zealand's natural resources would be great for the industry if supported by a fair, stable and competitive regulatory regime."
From their own site
"Sadly, it is increasingly the case that the resource debate in New Zealand is mired in misinformation.
A campaign is underway against: petroleum, coal and lignite; and minerals and energy development in sensitive areas, such as the oceans, and public conservation land."
So spin and vested interests at play....
drill...baby...drill...
and growth is still being prayed to even by organisations who dont seem to be quite so shot term,
"The Sustainable Business Council said the resources report was a critical part of the Government's business growth agenda. Council executive director Penny Nelson said getting a large scale increase in export growth while steadily improving the quality of the environment was the goal.
'Better dialogue among businesses and communities leading to decisive, responsible development of our resources will help bring the goal to reality,'' she said."
doh...one time use brigade still in charge....
grow.....baby...grow
regards

I've been really impressed by my local school's math strategy. Every week the kids get a basic facts worksheet which they have a minute to complete. Initially, it intimidated the heck out of them but over the year the routine of it and pressure to do better has seen their scores dramatically improve. I had my doubts about the sink or swim approach but it worked!

My bro and I raised chooks, sold the eggs, paid Dad to drive the mash and wheat home, collected shells and pulverised them for grit, and kept book on it all. We were 'Intermediate', (so 10/11/12) when we started.

My boys - 10 and 12 at the time - spent our year cruising the Barrier Reef, navigating. They'd work back from the need to arrive at a river bar-mouth an hour before high tide, plot a course to dodge islands and reefs, allow for currents (assist or against, or part thereof if side-on) and work out an ETD. Compare that to what they'd have got in class....